10 tips for Life Insurance Companies and AML

Are you vulnerable to money laundering attacks from international crime syndicates?

By Keith Swanson

Regulators across the globe are increasing their focus on AML, as demonstrated by recent high-profile AML enforcement actions against a number of large banks, MSB’s and casinos. At the same time international crime syndicates are targeting financial institutions to explore money laundering vulnerabilities.

How will this impact AML programs for life insurance companies?

Life insurance companies have AML challenges that are both simple and complex. The challenges are simple as there are less products and channels available compared to banks. But the challenges are also complex in relation to knowing the customer (KYC) and ultimate beneficial owners (even more so with the recent guidance from FATF on Ultimate Beneficial Owners (UBO)).

Besides the KYC and UBO challenges a life Insurance company compliance team is tasked to identify potential AML issues with a limited amount of available data.

Contrary to a retail banking operation, Insurance companies receive only very few transactions on a yearly basis. Additionally, there are many legacy policy systems with limited onboarding information captured over the years and a mirage of different data sources.

To start the journey to evaluate your current AML program discuss with peers how they revamped their compliance programs and identify future focus areas. Also, be prepared for further enforcement actions and implement a program to overcome the challenges around beneficial owners and due diligence related to beneficial owners without de-risking your business.

As a generic global best practice, ensure your compliance program is implemented with the following in mind:

1. Adopt a risk based approach

2. Implement a culture of Compliance (top down)

3. Document and verify your program

4. Validate your program using external guidance

5. KYC and UBO processes are in place

6. Compliance and business work together throughout product lifecycles

Above all the recommended approach is to keep it simple. Conduct a company risk assessment, map out areas of high risk (products/client/geographies), implement a solution, focus on high risk areas first and expand later.

Does your organisation have an action plan for AML?

Author Bio: Keith Swanson works for SAS in Asia Pacific and runs a specialist team dedicated to enterprise financial crimes and customer due diligence.